Everything an Occupational Therapy Practice Needs

Occupational therapists and occupational therapy assistants need a license, or a compact privilege, in the state where the patient is located when care is delivered. A new state license usually means a school transcript, verification of your NBCOT certification where the board asks for it, verifications of every license you have held, and in some states a jurisprudence exam and fingerprints.

The Occupational Therapy Licensure Compact lets OTs and OTAs who are licensed in good standing in a member state practice in other member states through a compact privilege, which is equivalent to a license in that state. Applications go through the compact itself, not through the state boards, and you must complete the jurisprudence exam for each state where you want a privilege. An FBI criminal background check is required, and your home state will not treat you as eligible until it is done. The compact's current status is shown below.

Practitioners apply for OT Compact privileges themselves, through the compact. We prepare everything: we confirm your eligibility, identify each state's jurisprudence requirement, line up your background check and gather your documents, and then you submit the application yourself. Until a privilege is issued, you still need a regular license in each state where you see patients, and we handle those applications through the board in the usual way.

Outpatient occupational therapists usually bill Medicare as occupational therapists in private practice, individually or through a group that each therapist reassigns benefits to. Commercial plans, Medicare Advantage plans, Medicaid and Medicaid managed care plans each credential separately, and many depend on a complete, attested CAQH ProView profile.

Occupational therapists cannot opt out of Medicare. CMS lists them among the professionals who are not eligible to opt out, so a cash-pay model for Medicare patients needs careful setup. If you furnish items Medicare pays for separately, such as lymphedema compression supplies, you also need a separate Medicare enrollment as a DMEPOS supplier.

Most occupational therapy treatment codes are timed in 15-minute units. Medicare counts the total timed minutes for the day: one unit needs at least 8 minutes, two need at least 23, three need at least 38, and so on. When several timed services are performed on the same day, the total timed minutes cap the number of units, and any service performed for 15 minutes or more is billed for at least one unit. Evaluations and other untimed codes are one unit regardless of length.

Every OT line carries the GO modifier to tie it to an occupational therapy plan of care. When an occupational therapy assistant furnishes a service in whole or in part, the CO modifier is added alongside GO, and Medicare pays that service at 85 percent of the fee schedule amount. Since 2025, OTs in private practice may supervise OTAs under general supervision for Medicare.

Medicare keeps a therapy threshold instead of a hard cap, and occupational therapy has its own threshold separate from physical therapy and speech-language pathology. The amount is updated every year. Claims above it must carry the KX modifier, which attests that the services are medically necessary and supported by the record. Claims above the threshold without the KX modifier are denied, and a separate, higher threshold can lead to targeted medical review. This year's amounts are in the note at the end of this section.

Medicare pays for outpatient occupational therapy only under a plan of care certified by a physician or nonphysician practitioner. The initial certification is timely when it is signed and dated within 30 days of the first treatment, including the evaluation. A certification lasts for the length of the plan or 90 calendar days from the first treatment, whichever is less, and recertification is needed when the plan changes significantly or care continues past the certified period.

Since 2025, the signature on the initial certification can be replaced by a signed and dated order or referral on file, as long as you document that you sent the plan of care to the physician or practitioner within 30 days of the initial evaluation. We track every plan of care from evaluation to signature so a late certification does not hold up a month of claims.

Pediatric occupational therapy is often paid by Medicaid. Under the Early and Periodic Screening, Diagnostic and Treatment benefit, most Medicaid beneficiaries under age 21 are entitled to medically necessary services to correct or ameliorate their conditions, which is why pediatric practices see Medicaid rules that differ from adult coverage. Each state, and each managed care plan within it, sets its own authorization and documentation requirements, and we build them into your scheduling and billing.

Schools can bill Medicaid too. CMS guidance says Medicaid-covered services in schools must be furnished by a Medicaid-participating provider who meets the qualification requirements for the benefit, and that therapy providers, occupational therapists included, must meet the federal requirements in 42 CFR 440.110. For services listed in a child's IEP or IFSP, Medicaid pays first and recovers from any other insurer afterward. For services outside the IEP or IFSP, the child's other health insurance must generally be billed before Medicaid.

If your practice contracts with schools or sees children in both settings, we set up separate payer rules for each so school-based visits and clinic visits are billed to the right party.

Opening an occupational therapy practice is a chain of steps that depend on each other: the entity before the tax ID, the tax ID and organizational NPI before Medicare and Medicaid enrollment, and enrollment before the first claim can be paid. Payer applications take the longest, so we start them as soon as the practice has the identifiers they ask for, and we set up your EHR, scheduling, payments and HIPAA program while they are pending.

If you are adding a pediatric clinic, a home-based program or a second state, we work out which licenses, enrollments and payer contracts each addition needs before you commit to a start date, so new therapists can see patients and bill from their first week.

Medicare and Medicaid review therapy claims against the record: the evaluation, the certified plan, daily notes with total timed minutes, and progress reports. Spending above the targeted medical review threshold can be selected for review, so we check notes against claims before submission.

Occupational therapy practices handle protected health information in clinics, homes and schools, often across several apps. We run your HIPAA security risk assessment, write your policies, train your staff and collect business associate agreements from every vendor that handles patient data, and we repeat the assessment every year.